It’s great that you’re helping her and she can get free bankruptcy advice. Best of luck to her as she goes through all of this. Remind her that it WILL get better.
I hope that it gets better. Her kids are furious with her. (and yes, she is the “safe” person to be angry with). Their angry stems, in part, with the inheritance they were promised. Mr. ellebud is out there getting excellent pro bono help for her in specialists in the fields that she needs.
…and yes, a tiny part of me feels that they didn’t discuss finances,…but maybe she knew more than we know…We may be the last generation of stay at home moms. But most of us do know we have…and that is good.
Don’t want to be a broken record – but a bankruptcy attorney may not know the ins and outs of what bills have to be paid. She may not have to pay a lot of what is owed by her deceased husband – @Agentninetynine is right that an estate attorney can be a godsend.
I don’t get “promising an inheritance.” It’s sad that they are mad at the poor woman who lost her spouse and is now in a mountain of debt. I really feel for her and am sad that her kids don’t see fit to HELP instead of piling onto her grief.
H and I don’t discuss finances much, but we both do go to the CPA and look at his summary sheets. My folks don’t have that type of a marriage. Mom has her finances and dad has his. They have some joint finances as well–it works fairly well for them. Dad is more of a gambler and mom is very risk averse. Fortunately, she has turned her funds over to my younger brother who is an excellent Boglehead and has been great with his own funds. Mom and dad sort of balance one another out, but sure wish dad were more cautious financially.
Their angry stems, in part, with the inheritance they were promised.>>>>>>>>>>
Wow. I would hope my kids would be mourning their dad, not their possible inheritance. Cold.
Exactly @intparent. My estate attorney helped me wade through the mounds of paperwork and fend off some of the creditors until we could work up a plan, which is still underway. You’re a good friend @BevHills. She’s going to need you!
If this happened to my parent, I wouldn’t be upset about my inheritance. But that my father left my mother in that circumstance. And that my mother was so very unaware of her circumstances.
I do wonder @bevhills if you might misunderstood why her children are so angry. I would be angry also. But not for the reason you stated.
@1Dreamer, I know somebody who filed for bankruptcy after piling up $100,000 in credit card debts.
The bankruptcy judge eliminated the debt owed.
Were federal and state income taxes supposed to be paid on the $100,000 debt?
He lives in California. No way did he pay taxes on the debt relief.
This is unfortunately more common scenario than one might expect. A lot of people are really sloppy. a lot are in denial about about finances and their savings but… you do have to sign a tax return every year and so around April 15th time, you would assume that people would be asking where is the tax form for me to sign and hopefully review…
If you file electronically and “sign” with a code - the other spouse really does not have to review or sign the return. They should, of course, look at it, but I can see how a passive spouse can be kept in the dark.
I can understand a spouse (especially of her friend’s generation) simply executing a tax return without even looking at it. We trust our spouses. Our own tax returns are close to 100 pages long and I will admit that in the early years when I was preoccupied with young children I executed them with just a glance. I go through them more thoroughly now but I understand how some might not do that.
Yes, it was traditional for the accountant to,put a blank piece of paper over front page, and have spouse sign. These women HD no idea what husband earned.
A thousand times yes to getting an estate attorney involved.
My H has only limited interest and knowledge about our finances. He knows that we have “enough,” and that’s all we care, since assets exceed spending. We do talk to CPA every March at a minimum.
@dstark No, I don’t believe there is any tax liability for debt to creditors wiped out by a bankruptcy.
The issue comes up when a debtor agrees to a settlement with the creditor for less than they owe outside of bankruptcy. Then, the difference between what they paid to settle the debt with the creditor/debt collector and the full amount they originally owed is considered forgiveness of debt, and the government considers forgiveness of debt by creditors to be taxable income t the debtor. Crazy, I know, and creditors don’t tell the debtor this (not really their responsibility to give financial advice - they just want to get what they can when they can) and many people don’t know this until they get a tax bill, as happened to my friend before I knew she’d done it.
The warning I was giving was to be careful concluding a settlement at a substantial discount with a creditor BEFORE filing for bankruptcy without consulting a financial adviser because as soon as a settlement is concluded, the tax liability would technically be triggered for this tax year, and it’s my understanding that you don’t get to wipe out tax liabilities by filing for bankruptcy later.
There are exceptions. I think it’s possible to do so in some cases if it’s been more than 3 or 4 years after the taxes are owed - as long as the creditor filed tax returns on time. The fact that the OP’s friend didn’t file tax returns for a few years might complicate things a bit more. Glad she has good friends like the OP to help find the correct experts to talk to and help her navigate.
P.S. I’m not an expert. Just trying to share some things I learned when my friend turned to me because I have a law background (although in a completely unrelated area) and it was easier for me to understand some of the complexities than it was for her, find and talk to some experts on her behalf, and help her make some decisions. It was a mess.
Mr. Ellebud, in addition to doing a bunch of work pro bono, did an outreach and three friends are helping pro bono. I heard the beginning of one conversation…“Wow…this is a spider’s web…” I left.
Thank you all so much…no one is perfect here. I know that…but the kids.
OP, I know from many previous threads what a giving, kind and helpful person you are. Your friend is indeed lucky to have your guidance during this time. You are getting some wise advice here.
Treading lightly, I’ll add that I understand how adult children might be angry. This has nothing to do with mourning or loving the deceased dad, or loving the mom. It’s silly to suggest that people can’t be upset about financial matters if they love the people involved.
Sometimes adult children make financial decisions based in part on the knowledge of promised future inheritance or on the understanding that their parent will not be dependent on them financially. It can be very difficult to learn much later that the financial reality is very different, particularly if the parent lived lavishly, spent foolishly, and was misleading about their finances. “We shouldn’t have opted for private school!” “We never should have taken the kids on that big trip to Africa!” “We had planned carefully for retirement, but now mom is suddenly completely dependent on us financially, and I won’t be able to retire in six years as we had hoped.” “Why didn’t they let us know they were in such a pickle so we could step in and get a plan in place to stop the bleeding?” These are life-jarring realizations and it can be difficult to navigate such turbulent waters despite genuine concern and love. Please note that I’m not suggesting that my choice of scenarios or adjectives are applicable to the OP’s friend’s situation; they’re just illustrative examples.
And that’s all I’m going to say about that!
OP, I wish the best for your friend, who is blessed to have your support and compassion.
Thanks.
Zip: Thank you so much. Really so much. And you are more correct than you ever know. When another friend and I were assisting in the packing my friend (who has a purse closet) was astounded at the shoes and purses. And they had time to straighten things out…but didn’t.
Well said Zip. My dad pre deceased his mom. Later we found out my aunt took my dementia sick grandmother to a lawyer (must have been a good day for her or a crooked lawyer) and changed the will. we were angry at my aunt. She told my mom her kids would eventually need it more than her brothers kids.
I know of another situation where caregivers have been hired and one of the kids is upset to see future inheritance being spent. That person doesn’t hold a regular job though. He has been mooching off his mom for a while.